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24-Hour Fitness Appeals Decision Against Arbitration Agreements

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24 Hour Fitness requested the Fifth Circuit to review the NLRB’s recent decision that its arbitration agreements violated the National Labor Relations Act.

The NLRB's December 2015 decision stated the arbitration agreement waived employees rights to initiate class action suits. 
Even though an employee could opt out of the arbitration agreement, there was still an option for the employer to pursue disciplinary actions or initiate a claim for breach of the agreement.

The National Trial Lawyers vividly explained some of the issues consumers face when they have a dispute with a company. Previous studies found that three out of four consumers were not aware of binding arbitration agreements in their documents.

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Opt-Out Illusion

According to the NLRB decision, each employee was given a handbook including a limited description of the arbitration policy and the instructions to opt out via a separate form.

The 2005 arbitration agreement provided: “[there] will be no right or authority for any dispute to be brought, heard, or arbitrated as a class action, or in a representative or private attorney general capacity on behalf of a class of persons of the public.

Future revisions of the arbitration policy included the same language, but also included a handbook receipt that stated even if the employee did not sign the form, they would be bound by the policies and arbitration agreement anyway. An employee would lose their rights whether they opted out or not.

Agreement Chilled Employee Activities

The Board believed the arbitration provisions restricted employees with similar disputes from engaging in activities protected under Section 7 of the National Labor Relations Act.

Section 7 protects the rights of employees to engage in activities for the purpose of collective bargaining and proceeding sections prohibit an employer from interfering with this right.

By signing the nondisclosure provision in the employee documents, an employee who initiates an arbitration proceeding or opts out of arbitration was not allowed to review any previous arbitration decision or any fellow workers.

A provision of the agreement provided: “[e]xcept as may be required by law, neither a party nor an arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of both parties.”

The NLRB stated that the nondisclosure provision “by way or the restrictions in its arbitration policy, seeks to restore the power imbalance between workers and their employers . . .”

Cease and Desist

24 Hour Fitness seeks to reverse the NLRB’s order to refrain from requiring mandatory arbitration, that mandates employees waive their rights to join a class action suit. The decision also required 24 Hour Fitness to rescind all versions of the arbitration agreements or revise them to make it clear that employees have class action options.

According to Law 360, the fitness company’s petition stated that the company was “aggrieved by the decision and order.”


This case is 24 Hour Fitness USA Inc v. National Labor Relations Board Case No 16-60005, before the U.S. Court of Appeals for the Fifth Circuit.

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